Indian Stocks Rebound as Asian Shares Climb on Stimulus Bets

  • Telecom, Airlines' shares sit out rebound, slump 6% to 19%
  • Sensex returns from bear-market edge; jumps most since Oct. 5

Indian stocks rose as Asian equities rebounded and technical indicators signaled the rout that dragged the nation’s benchmark gauge close to a bear market was overdone.

NTPC Ltd., the nation’s largest power generator, climbed the most in four months, while GAIL India Ltd., the biggest natural-gas supplier, was the top performer on the S&P BSE Sensex. Maruti Suzuki India Ltd. rallied the most since July 1. ITC Ltd., the top tobacco company, reversed losses in the last few minutes of trade even as its earnings missed estimates.

The S&P BSE Sensex jumped 2 percent at the close, the most since Oct. 5, as speculation that central banks will expand stimulus measures and a recovery in oil spurred a rally in global equities. The worst start of a year since 2011 brought the gauge within 0.5 percent of a bear market on Thursday. Its relative strength index slid to below the 30 level that some analysts say signals a rebound is imminent.

“We’re seeing an opportunistic rally after the market shake down,” Ajay Srivastava, managing director at New Delhi-based Dimensions Consulting Pvt., said in an interview with Bloomberg TV India on Friday. “The outlook remains foggy. We’re playing on the safe side by not taking many short or long positions.”

The Sensex closed below 24,000 level on Thursday for the first time since Prime Minister Narendra Modi’s party swept to power on May 16, 2014, as global funds pulled $1.6 billion from local shares this month amid concern about global growth. The gauge slid 19 percent from its January 2015 peak through Thursday, approaching the 20 percent threshold for a bear market.

Idea, Indigo

The rebound eluded telecom and airlines’ stocks.

Idea Cellular Ltd.tumbled 6.3 percent to its lowest price since April 2013. The company said after trading ended Thursday its third-quarter profit fell to 7.64 billion rupees ($112 million), missing the 7.96 billion rupees estimated by analysts. Bharti Airtel Ltd., India’s largest, was the worst performer on the Sensex, declining 3.4 percent.

Rising competition, such as Reliance Jio’s plans to start mobile business, is denting Idea’s revenue growth, Choice Equity Broking Pvt.’s Rajnath Yadav said in phone interview on Friday. Upcoming government auction of 700 MHz airwaves will add to Idea’s debt burden, according to Right Horizons Financial Pvt.’s Tushar Pendharkar.

InterGlobe Aviation Ltd. fell by the most on record, shaving $1.2 billion off the company’s market value, after the operator of India’s largest airline said it had to lease used planes while waiting for the new single-aisle model from Airbus Group SE. The stock plunged 19 percent, the most on record since its trading debut in November. Second biggest carrier Jet Airways India Ltd. fell 6.3 percent, while smaller rival SpiceJet Ltd. lost 5 percent.

Earnings Scorecard

ITC gained 0.8 percent, reversing an intraday loss of 1.2 percent. The company’s profit was little changed at 26.5 billion rupees, trailing the 27.6-billion rupee median estimate of 28 analysts in a Bloomberg survey.

So far, four of the six Sensex companies that have reported earnings for the December quarter have beaten estimates. Fifty-seven percent of Sensex companies in the September quarter posted earnings that matched or beat estimates, versus 60 percent in June, data compiled by Bloomberg show.

The Sensex trades at 14.7 times projected 12-months earnings, compared with a multiple of 10.3 for the MSCI Emerging Markets Index.

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